In a recent case before a New Jersey appeals court, the court considered whether the wife was entitled to the gains and losses on her share of the husband’s 401(k) from the date of the filing of the complaint until the date of distribution. In this New Jersey divorce case, the parties had been married for twenty-seven years before the wife filed for divorce. The parties agreed to have their disputed issues resolved through arbitration and mediation.
Through mediation, the parties reached an agreement on their disputed issues, and the arbitrator prepared a memorandum of understanding, which both parties signed. In the agreement, the parties agreed that the wife would receive half of the husband’s 401(k) balance, which was approximately $340,000. The parties agreed that the $170,000 would be applied to the husband’s equitable distribution obligation.
The wife later argued that she was entitled to the gains and losses on her share of the 401(k) account from the filing of the complaint until the date of distribution. The trial court disagreed, finding she was not entitled to the gains and losses, and she appealed. The appeals court agreed with the trial court, finding that the memorandum of understanding was clear regarding the distribution of the 401(k) account. It clearly stated that the wife was entitled to half of the account—$170,000. It also said that the sum would be paid by the husband towards the plaintiff’s share of the equitable distribution. There was no reference to the wife’s entitlement to credits or debits for any market fluctuations. It was also unnecessary to establish a formula to allocate shares because the parties had agreed on the amount of the wife’s share. Thus, the court found that the wife was not entitled to the gains and losses after the filing of the divorce complaint.
Equitable Distribution in New Jersey
New Jersey is an equitable distribution state, which means that marital property is divided equitably among the parties. Under New Jersey family law, the goal of equitable distribution is to carry out a fair and just division of the marital property. If the case is brought before a judge, the judge must identify the marital assets, determine the value of each asset, and decide how to allocate the assets equitably, based on the circumstances in the case. Courts have explained that equitable distribution does not mean an equal distribution of assets. It is instead meant to advance the goals of equity and fairness.
The assets that are subject to equitable distribution are those that were legally or beneficially acquired during the marriage. Generally, an asset acquired before the marriage is exempt from equitable distribution. Some other assets, such as third party gifts and inheritances, may also be exempt.
Under New Jersey’s equitable distribution statute, courts consider will a variety of factors, including, but not limited to: the length of the marriage; the age and relative health of the parties; the income and assets each party brought into the marriage; the couple’s standard of living during the marriage; the overall economic situation of each party; the earning capacity of each party; the contribution of each party to the value of the marital property and contributions as a homemaker; tax consequences; and the total value of the property. In addition, the court will consider and any other relevant factors.
Contact a New Jersey Divorce Lawyer Today
If you are considering filing for divorce, or your spouse has already filed, reach out to the Law Office of Jeffrey R. Brown. Since 2002, Mr. Brown has been dutifully representing clients in a wide range of family law matters, including New Jersey divorce cases. He understands the stresses that divorce puts on his clients, and takes every effort to make the process as seamless as possible. To learn more, or to schedule a consultation, call 732-613-0066.